ECO121

B

QN=1 (17719) When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all a. rely upon the government to provide us with the basic necessities of life. b. rely upon one another for the goods and services we consume. c. have similar tastes and abilities. d. are concerned about one another's well-being.

b

QN=1 (17719) When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all a. rely upon the government to provide us with the basic necessities of life. b. rely upon one another for the goods and services we consume. c. have similar tastes and abilities. d. are concerned about one another's well-being.

B

QN=10 (17755) Refer to Table 3-11. Assume that Falda and Varick each has 1 hour available. If each person divides their time equally between the production of wheat and cloth, then total production is a. 4 bushels of wheat and 7.5 yards of cloth. b. 7 bushels of wheat and 13.5 yards of cloth. c. 8 bushels of wheat and 15 yards of cloth. d. 14 bushels of wheat and 27 yards of cloth.

d

QN=102 (17797) Arlo is offered a job in Des Moines, where the CPI is 60, and a job in New York, where the CPI is 125. Arlo's job offer in Des Moines is for $48,000. How much does the New York job have to pay in order for the two salaries to represent the same purchasing power? a. $23,040 b. $52,000 c. $79,200 d. $100,000

B

QN=11 (17752) Refer to Table 3-5. Spain should export a. cheese and import bread. b. bread and import cheese. c. both goods and import neither good. d. neither good and import both goods.

b

QN=11 (17752) Refer to Table 3-5. Spain should export a. cheese and import bread. b. bread and import cheese. c. both goods and import neither good. d. neither good and import both goods.

A

QN=12 (17739) Refer to Table 3-6. The opportunity cost of 1 dress for Carlos is a. 1/2 quilt. b. 2 hours of labor. c. 2 quilts. d. 45 hours of labor.

A

QN=13 (17749) Refer to Table 3-4. The opportunity cost of 1 pound of potatoes for the farmer is a. 1/5 pound of meat. b. 2 hours of labor. c. 5 pounds of meat. d. 5 hours of labor.

B

QN=14 (17736) Refer to Table 3-2. At which of the following prices would both Aruba and Iceland gain from trade with each other? a. 2 radios for 4 coolers b. 2 radio for 6 coolers c. 2 radio for 10 coolers d. Aruba and Iceland could not both gain from trade with each other at any price.

C

QN=15 (17740) Refer to Figure 3-4. If Perry and Jordan each spends all their time producing the good in which they have a comparative advantage and trade takes place at a price of 1 novel for 7 poems, then a. Perry and Jordan will both gain from this trade. b. Perry will gain from this trade, but Jordan will not. c. Jordan will gain from this trade, but Perry will not. d. neither Perry nor Jordan will gain from this trade.

B

QN=16 (17760) Refer to Figure 3-6. Daisy has an absolute advantage in the production of a. both goods and a comparative advantage in the production of pies. b. both goods and a comparative advantage in the production of tarts. c. neither good and a comparative advantage in the production of pies. d. neither good and a comparative advantage in the production of tarts.

C

QN=17 (17720) What must be given up to obtain an item is called a. out-of-pocket cost. b. comparative worth. c. opportunity cost. d. absolute value.

C

QN=18 (17759) Refer to Figure 3-5. Puneet has an absolute advantage in the production of a. purses and Chirag has an absolute advantage in the production of wallets. b. wallets and Chirag has an absolute advantage in the production of purses. c. both goods and Chirag has an absolute advantage in the production of neither good. d. neither good and Chirag has an absolute advantage in the production of both goods.

D

QN=19 (17725) Adam Smith a. and David Ricardo both opposed free trade. b. opposed free trade, but David Ricardo supported it. c. supported free trade, but David Ricardo opposed it. d. and David Ricardo both supported free trade.

C

QN=2 (17723) When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy a. falls. b. stays the same. c. rises. d. may fall, rise, or stay the same.

B

QN=20 (17756) Refer to Table 3-11. Varick has a comparative advantage in the production of a. wheat. b. cloth. c. both goods. d. neither good.

B

QN=21 (17731) Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be a. 100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland. b. 300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland. c. 200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland. d. 300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.

D

QN=22 (17735) Refer to Table 3-1. What is Sardi's opportunity cost of producing one bushel of corn? a. 3/5 pound of pork b. 6/5 pounds of pork c. 4/3 pounds of pork d. 5/3 pounds of pork

A

QN=23 (17750) Refer to Table 3-5. The opportunity cost of 1 unit of cheese for Spain is a. 1/2 unit of bread. b. 2 hours of labor. c. 2 units of bread. d. 4 hours of labor.

A

QN=24 (17742) Refer to Figure 3-9. If Uzbekistan and Azerbaijan switch from each country dividing its time equally between the production of bolts and nails to each country spending all of its time producing the good in which it has a comparative advantage, then total production will increase by a. 5 bolts and 10 nails. b. 15 bolts and 40 nails. c. 20 bolts and 50 nails. d. 30 bolts and 80 nails.

D

QN=25 (17754) Refer to Table 3-9. Barb has an absolute advantage in a. both setting up and testing computers and a comparative advantage in setting up computers. b. both setting up and testing computers and a comparative advantage in testing computers. c. neither setting up nor testing computers and a comparative advantage in setting up computers. d. neither setting up nor testing computers and a comparative advantage in testing computers.

D

QN=26 (17722) Which of the following is not correct? a. The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. b. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. c. The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. d. The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

D

QN=27 (17727) Which of the following is not correct? a. Economists are generally united in their support of free trade. b. The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time. c. David Ricardo argued that Britain should not restrict imports of grain. d. Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage.

d

QN=27 (17727) Which of the following is not correct? a. Economists are generally united in their support of free trade. b. The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time. c. David Ricardo argued that Britain should not restrict imports of grain. d. Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage.

B

QN=28 (17726) Which famous economist developed the principle of comparative advantage as we know it today? a. Adam Smith b. David Ricardo c. John Maynard Keynes d. Milton Friedman

D

QN=29 (17747) A country that currently does not trade with other countries could benefit by a. restricting imports and promoting exports. b. promoting imports and restricting exports. c. restricting both imports and exports. d. not restricting trade.

D

QN=3 (17730) Assume for Namibia that the opportunity cost of each hut is 200 bowls. Then which of these pairs of points could be on Namibia's production possibilities frontier? a. (200 huts, 30,000 bowls) and (150 huts, 35,000 bowls) b. (200 huts, 40,000 bowls) and (150 huts, 30,000 bowls) c. (300 huts, 50,000 bowl) and (200 huts, 60,000 bowls) d. (300 huts, 60,000 bowls) and (200 huts, 80,000 bowls)

B

QN=30 (17757) Refer to Figure 3-3. If Enid must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work? a. 40 hours b. 100 hours c. 400 hours d. 1600 hours

b

QN=30 (17757) Refer to Figure 3-3. If Enid must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work? a. 40 hours b. 100 hours c. 400 hours d. 1600 hours

D

QN=31 (17744) If the production possibilities frontier is bowed outward, then "?" could be a. 50. b. 75. c. 100. d. 125.

D

QN=32 (17729) By definition, exports are a. limits placed on the quantity of goods brought into a country. b. goods in which a country has an absolute advantage. c. people who work in foreign countries. d. goods produced domestically and sold abroad.

A

QN=33 (17738) Refer to Table 3-6. Assume that Hilda and Carlos each has 90 hours available. Originally, each person divided their time equally between the production of quilts and dresses. Now, each person spends all their time producing the good in which they have a comparative advantage. As a result, the total output of dresses increased by a. 3.5. b. 4.5. c. 5.5. d. 9.0.

A

QN=34 (17737) Refer to Table 3-2. Aruba's opportunity cost of one cooler is a. 0.4 radio and Iceland's opportunity cost of one cooler is 0.25 radio. b. 0.4 radio and Iceland's opportunity cost of one cooler is 4 radios. c. 2.5 radios and Iceland's opportunity cost of one cooler is 0.25 radio. d. 2.5 radios and Iceland's opportunity cost of one cooler is 4 radios.

C

QN=35 (17745) Absolute advantage is found by comparing different producers' a. opportunity costs. b. payments to land, labor, and capital. c. input requirements per unit of output. d. locational and logistical circumstances.

B

QN=36 (17741) Refer to Figure 3-4. The opportunity cost of 1 novel for Jordan is a. 1/3 poem. b. 3 poems. c. 4 poems. d. 12 poems.

A

QN=37 (17751) Refer to Table 3-5. England has a comparative advantage in the production of a. cheese and Spain has a comparative advantage in the production of bread. b. bread and Spain has a comparative advantage in the production of cheese. c. both goods and Spain has a comparative advantage in the production of neither good. d. neither good and Spain has a comparative advantage in the production of both goods.

A

QN=38 (17724) Two people can benefit from specialization and trade by obtaining a good at a price that is a. lower than his or her opportunity cost of that good. b. the same as his or her opportunity cost of that good. c. higher than his or her opportunity cost of that good. d. different than his or her opportunity cost of that good.

A

QN=39 (17746) For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to a. have a comparative advantage in both activities. b. have an absolute advantage in both activities. c. be more productive per unit of time in both activities. d. gain from trade with each other.

D

QN=4 (17733) Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 30 workers in each country. No trade occurs between the two countries. Boatland produces and consumes 75 units of wheat and 375 units of fish per year while Farmland produces and consumes 375 units of wheat and 75 units of fish per year. If trade were to occur, Boatland would trade 90 units of fish to Farmland in exchange for 80 units of wheat. If Boatland now completely specializes in fish production, how many units of fish could it now consume along with the 80 units of imported wheat? a. 490 units b. 500 units c. 610 units d. 660 units

B

QN=40 (17753) Refer to Table 3-7. Korea should specialize in the production of a. cars and import airplanes. b. airplanes and import cars. c. both goods and import neither good. d. neither good and import both goods.

b

QN=40 (17753) Refer to Table 3-7. Korea should specialize in the production of a. cars and import airplanes. b. airplanes and import cars. c. both goods and import neither good. d. neither good and import both goods.

B

QN=41 (17734) Refer to Table 3-1. At which of the following prices would both Sardi and Tinaka gain from trade with each other? a. 6 bushels of corn for 10.5 pounds of pork b. 12 bushels of corn for 19 pounds of pork c. 24 bushels of corn for 34 pounds of pork d. Sardi and Tinaka could not both gain from trade with each other at any price.

B

QN=42 (17721) The opportunity cost of an item is a. the number of hours that one must work in order to buy one unit of the item. b. what you give up to get that item. c. always less than the dollar value of the item. d. always greater than the cost of producing the item.

D

QN=43 (17743) When can two countries gain from trading two goods? a. (i) when the first country can only produce the first good and the second country can only produce the second good b. (ii) when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost c. (iii) when the first country is better at producing both goods and the second country is worse at producing both goods d. Two countries could gain from trading two goods under all of the conditions in (i), (ii), and (iii).

B

QN=44 (17748) Refer to Table 3-3. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is a. 24 toothbrushes and 12 hairbrushes. b. 48 toothbrushes and 24 hairbrushes. c. 96 toothbrushes and 48 hairbrushes. d. 720 toothbrushes and 1440 hairbrushes.

D

QN=45 (17763) If an economy's GDP falls, then it must be the case that the economy's a. income falls and saving rises. b. income and saving both fall. c. income falls and expenditure rises. d. income and expenditure both fall.

D

QN=46 (17778) Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist? a. the effect of taxes on the prices of airline tickets, the profitability of automobile-manufacturing firms, and employment trends in the food-service industry b. the price of beef, wage differences between genders, and antitrust laws c. how consumers maximize utility, and how prices are established in markets for agricultural products d. the percentage of the labor force that is out of work, and differences in average income from country to country

d

QN=46 (17778) Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist? a. the effect of taxes on the prices of airline tickets, the profitability of automobile-manufacturing firms, and employment trends in the food-service industry b. the price of beef, wage differences between genders, and antitrust laws c. how consumers maximize utility, and how prices are established in markets for agricultural products d. the percentage of the labor force that is out of work, and differences in average income from country to country

A

QN=47 (17787) The value of the housing services provided by the economy's owner-occupied houses is a. included in GDP, and the estimated rental values of the houses are used to place a value on these housing services. b. included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services. c. excluded from GDP since these services are not sold in any market. d. excluded from GDP since the value of these housing services cannot be estimated with any degree of precision.

D

QN=48 (17783) Which of the following items is counted as part of government purchases? a. (i) The federal government pays the salary of a Navy officer. b. (ii) The state of Nevada pays a private firm to repair a Nevada state highway. c. (iii) The city of Las Vegas, Nevada pays a private firm to collect garbage in that city. d. All (i), (ii), and (iii) are correct.

C

QN=49 (17764) Gross domestic product is defined as a. (i) the quantity of all final goods and services demanded within a country in a given period of time. b. (ii) the quantity of all final goods and services supplied within a country in a given period of time. c. (iii) the market value of all final goods and services produced within a country in a given period of time. d. Both (i) and (ii) are correct.

C

QN=5 (17761) Refer to Figure 3-7. The opportunity cost of 1 bowl for Juba is a. 1/4 cup. b. 2/3 cup. c. 3/2 cups. d. 4 cups.

D

QN=50 (17779) Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called a. an inventory good. b. a transitory good. c. a preliminary good. d. an intermediate good.

A

QN=51 (17770) Refer to Table 23-5. In 2007, Batterland's nominal GDP was a. $300. b. $390. c. $400. d. $540.

D

QN=52 (17765) The consumption component of GDP includes spending on a. durable goods and nondurable goods, but not spending on services. b. durable goods and services, but not spending on nondurable goods. c. nondurable goods and services, but not spending on durable goods. d. durable goods, nondurable goods, and services.

D

QN=53 (17768) Suppose an economy's production consists only of corn and soybeans. In 2005, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2004, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2004 as the base year, it follows that, for 2005, a. nominal GDP is $50, real GDP is $100, and the GDP deflator index is 50. b. nominal GDP is $50, real GDP is $100, and the GDP deflator index is 200. c. nominal GDP is $100, real GDP is $50, and the GDP deflator index is 50. d. nominal GDP is $100, real GDP is $50, and the GDP deflator index is 200.

C

QN=54 (17788) Which of the following statements is correct? a. The value of intermediate goods is always included in GDP. b. The value of intermediate goods is included in GDP only if those goods were produced in the previous year. c. The value of intermediate goods is included in GDP only if those goods are added to firms' inventories to be used or sold at a later date. d. The value of intermediate goods is never included in GDP.

B

QN=55 (17775) A good is produced by a firm in 2010, added to the firm's inventory in 2010, and sold to a household in 2011. It follows that a. the value of the good is added to the investment category of 2010 GDP and added to the investment category of 2011 GDP. b. the value of the good is added to the investment category of 2010 GDP and subtracted from the investment category of 2011 GDP. c. the value of the good is subtracted from the investment category of 2010 GDP and added to the investment category of 2011 GDP. d. the value of the good is subtracted from the investment category of 2010 GDP and subtracted from the investment category of 2011 GDP.

C

QN=56 (17782) GDP is defined as a. the market value of all goods and services produced within a country in a given period of time. b. the market value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. c. the market value of all final goods and services produced within a country in a given period of time. d. the market value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

C

QN=57 (17784) In the economy of Wrexington in 2008, consumption was 60% of GDP, government purchases were $212, imports were $67 and 67% of the value of exports, investment was one-half of the value of consumption. What was Wrexington's GDP in 2008? a. $1450 b. $1790 c. $2450 d. $2790

c

QN=57 (17784) In the economy of Wrexington in 2008, consumption was 60% of GDP, government purchases were $212, imports were $67 and 67% of the value of exports, investment was one-half of the value of consumption. What was Wrexington's GDP in 2008? a. $1450 b. $1790 c. $2450 d. $2790

B

QN=58 (17790) Net exports equal a. exports plus imports. b. exports minus imports. c. imports minus exports. d. GDP minus imports.

C

QN=59 (17791) A German citizen buys an automobile produced in the United States by a Japanese company. As a result, a. U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. b. U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP is unaffected, and German GDP decreases. c. U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. d. U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net exports, GNP, and GDP decrease.

B

QN=6 (17718) People who provide you with goods and services a. are acting out of generosity. b. do so because they get something in return. c. have chosen not to become interdependent. d. are required to do so by the government.

D

QN=60 (17769) Refer to Table 23-5. In 2008, Batterland's real GDP was a. $100. b. $390. c. $400. d. $540.

d

QN=60 (17769) Refer to Table 23-5. In 2008, Batterland's real GDP was a. $100. b. $390. c. $400. d. $540.

. B

QN=61 (17780) In 2007, Corny Company grows and sells $2 million worth of corn to Tasty Cereal Company, which makes corn flakes. Tasty Cereal Company produces $6 million worth of corn flakes in 2007, with sales to households during the year of $4.5 million. The unsold $1.5 million worth of corn flakes remains in Tasty Cereal Company's inventory at the end of 2007. The transactions just described contribute how much to GDP for 2007? a. $4.5 million b. $6 million c. $6.5 million d. $8 million

C

QN=62 (17781) The information below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest? a. Kenya, Tanzania, Zimbabwe b. Tanzania, Kenya, Zimbabwe c. Zimbabwe, Kenya, Tanzania d. Zimbabwe, Tanzania, Kenya

A

QN=63 (17777) Def01 stands for GDP deflator in year 1. Def02 stands for GDP deflator in year 2. The inflation rate in year 2 equals a. 100*(Def02-Def01)/Def01. b. 100*(Def02-Def01)/Def02. c. 100*(Def01-Def02)/Def01. d. 100*(Def01-Def02)/Def02.

C

QN=64 (17762) Macroeconomists study a. the decisions of households and firms. b. the interaction between households and firms. c. economy-wide phenomena. d. regulations on firms and unions.

c

QN=64 (17762) Macroeconomists study a. the decisions of households and firms. b. the interaction between households and firms. c. economy-wide phenomena. d. regulations on firms and unions.

B

QN=65 (17767) Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $3,000. Neither firm had any inventory at the beginning of 2009. During that year, Cowhide produced enough leather for 20 couches. Couches, Inc. bought 80% of that leather for $16,000 and promised to buy the remaining 20% for $4,000 in 2010. What was the economy's GDP for the 2009? a. $48,000 b. $52,000 c. $64,000 d. $68,000

C

QN=66 (17774) Household spending on education is counted in which component or subcomponent of GDP? a. consumption of durable goods b. consumption of nondurable goods c. consumption of services d. investment

C

QN=67 (17776) Which of the following statistic is usually regarded as the best single measure of a society's economic well-being? a. the unemployment rate b. the inflation rate c. gross domestic product d. the trade deficit

c

QN=67 (17776) Which of the following statistic is usually regarded as the best single measure of a society's economic well-being? a. the unemployment rate b. the inflation rate c. gross domestic product d. the trade deficit

C

QN=68 (17773) Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2007, Quality Motors produced $20 million worth of automobiles, with $12 million in sales to Americans, $6 million in sales to Canadians, and $2 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2007? a. $12 million b. $14 million c. $20 million d. $34 million

c

QN=68 (17773) Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2007, Quality Motors produced $20 million worth of automobiles, with $12 million in sales to Americans, $6 million in sales to Canadians, and $2 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2007? a. $12 million b. $14 million c. $20 million d. $34 million

C

QN=69 (17789) What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services? a. capital b. consumption c. investment d. costs

B

QN=7 (17732) Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 280 bushels of corn and 450 bushels of oats. b. 340 bushels of corn and 500 bushels of oats. c. 360 bushels of corn and 520 bushels of oats. d. 360 bushels of corn and 640 bushels of oats.

C

QN=70 (17785) In the economy of Wrexington in 2008, nominal GDP was $20 billion and the GDP deflator ratio was 500. What was Wrexington's real GDP in 2008? a. $2.5 million b. $10 million c. $40 million d. $100 million

B

QN=71 (17766) Refer to Table 23-6. Which of the following is not correct? a. This economy experienced growth from 1974 to 1975. b. This economy experienced growth from 1975 to 1976. c. This economy experienced growth from 1976 to 1977. d. This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977.

b

QN=71 (17766) Refer to Table 23-6. Which of the following is not correct? a. This economy experienced growth from 1974 to 1975. b. This economy experienced growth from 1975 to 1976. c. This economy experienced growth from 1976 to 1977. d. This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977.

D

QN=72 (17786) If you buy a burger and fries at your favorite fast food restaurant, a. then neither GDP nor consumption will be affected because you would have eaten at home had you not bought the meal at the restaurant. b. then GDP will be higher, but consumption spending will be unchanged. c. then GDP will be unchanged, but consumption spending will be higher. d. then both GDP and consumption spending will be higher.

C

QN=73 (17771) A transfer payment is a. a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. b. a payment that is automatically transferred from your bank account to pay a bill or some other obligation. c. a form of government spending that is not made in exchange for a currently produced good or service. d. the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.

D

QN=74 (17772) When economists talk about growth in the economy, they measure that growth as the a. absolute change in nominal GDP from one period to another. b. percentage change in nominal GDP from one period to another. c. absolute change in real GDP from one period to another. d. percentage change in real GDP from one period to another.

d

QN=74 (17772) When economists talk about growth in the economy, they measure that growth as the a. absolute change in nominal GDP from one period to another. b. percentage change in nominal GDP from one period to another. c. absolute change in real GDP from one period to another. d. percentage change in real GDP from one period to another.

C

QN=75 (17802) Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year. In 2002, the basket's cost was $50; in 2004, the basket's cost was $52; and in 2006, the basket's cost was $54.60. The value of the CPI in 2004 was a. 96.2. b. 102.0. c. 104.0. d. 152.0.

C

QN=76 (17807) In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct? a. The base year is always the first year among the years for which computations are being made. b. It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year. c. The value of the consumer price index is always 100 in the base year. d. The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.

D

QN=77 (17800) In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $1.7 million. A price index for nonresidential construction was 24 in 1949, 108 in 1987, and 126.5 in 2000. According to these numbers, the hospital cost about a. $2.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars. b. $2.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars. c. $2.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars. d. $2.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.

C

QN=78 (17806) The CPI is more commonly used as a gauge of inflation than the GDP deflator is because a. the CPI is easier to measure. b. the CPI is calculated more often than the GDP deflator is. c. the CPI better reflects the goods and services bought by consumers. d. the GDP deflator cannot be used to gauge inflation.

A

QN=79 (17817) Table 24-3 The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. Refer to Table 24-3. The cost of the basket a. increased from 2006 to 2007 and increased from 2007 to 2008. b. increased from 2006 to 2007 and decreased from 2007 to 2008. c. decreased from 2006 to 2007 and increased from 2007 to 2008. d. decreased from 2006 to 2007 and decreased from 2007 to 2008.

C

QN=8 (17758) Refer to Figure 3-3. Enid has an absolute advantage in the production of a. burritos and a comparative advantage in the production of tacos. b. burritos and a comparative advantage in the production of burritos. c. neither good and a comparative advantage in the production of tacos. d. neither good and a comparative advantage in the production of burritos.

D

QN=80 (17799) The economy's inflation rate is the a. price level in the current period. b. absolute change in the price level from the previous period. c. change in the gross domestic product from the previous period. d. percentage change in the price level from the previous period.

A

QN=81 (17792) When the consumer price index rises, the typical family a. has to spend more dollars to maintain the same standard of living. b. can spend fewer dollars to maintain the same standard of living. c. finds that its standard of living is not affected. d. can offset the effects of rising prices by saving more.

B

QN=82 (17796) Table 24-1 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 10 bushels of peaches and 15 bushels of pecans. Refer to Table 24-1. If 2005 is the base year, then the CPI for 2005 was a. 83.3. b. 100.0. c. 120.0. d. 200.0.

A

QN=83 (17801) The consumer price index was 225 in 2006 and 236 in 2007. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period? a. 1.6 percent b. 4.9 percent c. 6.82 percent d. 11.4 percent

A

QN=84 (17820) Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90. Refer to Scenario 24-4. If Quinn only cares about maximizing her purchasing power, then she should a. take the Charlieville job. b. take the Wrexington job. c. take either job because they both have the same purchasing power. d. The answer cannot be determined from the information given because a salary is not the same as purchasing power.

B

QN=85 (17805) Economists use the term inflation to describe a situation in which a. some prices are rising faster than others. b. the economy's overall price level is rising. c. the economy's overall price level is high, but not necessarily rising. d. the economy's overall output of goods and services is rising faster than the economy's overall price level.

D

QN=9 (17728) By definition, imports are a. people who work in foreign countries. b. goods in which a country has an absolute advantage. c. limits placed on the quantity of goods leaving a country. d. goods produced abroad and sold domestically.

d

QN=9 (17728) By definition, imports are a. people who work in foreign countries. b. goods in which a country has an absolute advantage. c. limits placed on the quantity of goods leaving a country. d. goods produced abroad and sold domestically.